Electricity Daily

In an attempt to end the controversy over the possible link between increased
electricity competition and air pollution in the Northeast, Ipalco Enterprises
Chairman John Hodowal last week called for a new national performance standard
for emissions of nitrogen oxides from fossil-fueled plants. NOx is an ozone
precursor. Ipalco is the parent of Indianapolis Power and Light.

The Ipalco proposal, offered at the company's annual meeting in Indianapolis,
sets an emission limit at 0.35 pounds of NOx per million Btu and would reduce
NOx emissions by about 55 percent from 1990 levels. Hodowal said there would
be a three-year deadline for implementing the new generating-plant standard.

The Ipalco plan is specifically aimed at power plants, unlike the new ozone
ambient air quality standard proposed last year by the Environmental Protection
Agency, which would set a limit of 0.08 ppm of ozone over eight hours, and
leaves implementation of the standards up to state regulators. The Ipalco
proposal, Assistant General Council David McCarthy told Electricity Daily,
"is a smokestack standard, unlike the EPA" plan. According to McCarthy, the
Ipalco plan would also go into effect in three years, a much faster timetable
than the EPA plan.

Ipalco's approach would create a company-wide NOx "bubble" within an individual
state, McCarthy explained. A multi-state company would not be able to borrow
emissions from one state to meet the 0.35 pound limit in another state. The
plan does not contemplate the kind of cap-and-trading mechanism that
characterizes the sulfur dioxide reduction program under the 1990 Clean Air
Act amendments.

A key advantage of the plan, McCarthy said, is that it would be "simple and
straightforward to implement," both at the federal and state levels. It would
also require no change in new source performance requirements, the "prevention
of significant deterioration" rules, or any other existing EPA standard or
program.

"We believe the new standard we are proposing will be fair to our industry
while also being of significant benefit to the environment and to Americans
with respiratory problems," Hodowal said. "Agreeing on this new standard
will allow us to come to terms with the interregional claim that, with increased
competition, Midwest utilities might cause environmental problems in the
Northeast. As a nation, we need to put this issue behind us and move forward
with true competition, customer choice and the end of abusive pricing practices."

Ipalco Enterprises' proposal for a 0.35 pounds-per-million-Btu limit on NOx
emissions from power plants comes amid a developing backlash to the Environmental
Protection Agency's plan for new ambient air quality standards for ozone
and particulates as small as 2.5 microns. EPA has justified its ozone proposal
partly on the grounds that smog can exacerbate asthma in children, a growing
victim class.

The industry-led backlash, which has energized key Democratic lawmakers usually
friendly to EPA, appears to be producing results at the White House. Jack
Gibbons, the White House science advisor, has been critical of the science
behind the EPA plan (ED, April 30), and the Washington Post last week reported
that the White House plans a "hands-on role in crafting a final version of
the regulations"--a move that prompted speculation that the proposals might
be softened. According to the Post, the EPA regulations will be vetted by
the National Economic Council and the Council on Environmental Quality, as
well as getting the normal scrutiny of the Office of Management and Budget.

But it is becoming clear that asthma and outdoor air may have little or nothing
to do with each other. A Newsweek cover story last week cited several scientific
experts who debunked the notion that asthma and outdoor air pollution are
related. The U.S. Center for Disease Control has said, "Nationwide, no evidence
exists that supports the role of outdoor pollution levels as the primary
factor driving the changes in the epidemiological patterns of asthma morbidity.
Changes in the indoor environment, caused by changes in indoor living, are
a much more plausible pathway."

Earlier this month, a team of researchers from the National Cooperative
Inner-City Asthma Study reported in the New England Journal of Medicine that
a study of 476 inner-city kids from eight cities saw the dominant cause of
asthma in children to be an allergy to cockroaches. The authors concluded
that the answer to the asthma epidemic may be pesticides, not reductions
in emissions of NOx and other ozone precursors.